Published on Tuesday, June 21, 2011
In the second in a series of guest comments, Mark Bradbury, joint CEO of Cardiff-based travel technology provider RWA Ltd, takes a closer look at the online travel market in South Africa.
This week, he investigates the adoption of online booking of both flight only and holiday packages.
In the final article in a series of guest comments, Mark Bradbury, joint CEO of Cardiff-based travel technology provider RWA, takes a look at online booking of dynamic packages in South Africa and at the changes he expects to take place over the next two to three years.
"The flight + add-on hotel online booking segment is still in an early adopter stage. Domestic travel was and still is a major driver of flight only bookings and the majority of domestic travellers in South Africa are travelling to visit friends and relatives (VFR) with only around 12 to 16% going on holiday and business trips representing around 5% of all trips.
Of course, most of these VFR travellers stay with friends and family so the requirement for needing accommodation for these trips is quite low.
In other markets, business travellers have been a major driver of flight + hotel (+ other e.g. car) bookings. This segment then evolved further as traditional holiday package consumers moved away from booking standard packages, demanding more flexibility and being wooed with promises of cheaper prices from so called “dynamic packaging".
In South Africa, there is a relatively low percentage of business travel and their travel requirements has been fulfilled either by travel agents or by booking flights and accommodation separately with the major suppliers.
Looking forwards, over the next two to three years I would expect to see a number of changes:
1. The evolution of this segment from innovator through early adopters to early majority driven by a combination of the innovative new companies that have emerged and perhaps one of the more traditional tour operators – who will need to move quickly if they are to remain competitive. The evolution will be shorter than some would envisage as I believe the market conditions and the right ‘industry players are in place to make this happen.
2. Introduction of new technology, perhaps using technology and systems that have been proven in other markets, to provide user-friendly, reliable and innovative (for South Africa) online browsing, searching and booking capabilities.
3. The continued emergence of South Africa (and indeed Africa) as an inbound destination which will drive innovation and online booking for both inbound and receptive companies who begin to offer access to lodges and other accommodation that is not easily bookable online today.
4. A ‘shake-out’ in the current travel players as both tour operators and travel agencies work through how to embrace the internet as a direct sales channel and ‘consumer-power’ starts to emerge. All travel companies, whether operators or agents will need to be clear on what value they offer and make that ‘value proposition’ clear and tangible to their customers.
5. Increased interest in the South African leisure travel market from the GDS providers and established overseas companies such as Expedia.
In conclusion, the shift to online booking of leisure travel has definitely started. Those companies already in this ‘space’ are commenting that they are starting to see good adoption and growth in their various online channels. They are building successful online brands through innovative marketing campaigns.
It is a really interesting time to be involved in South African travel and tourism. I suspect over the next two to three years we will see who are going to be the major players in an industry that has great potential and opportunities for those bold enough and shrewd enough to take make the right decisions and leverage the right technology."
Mark Bradbury is joint CEO of RWA Ltd, a travel technology provider that has been working closely with a number of South African travel companies for the last 5 years to help them deliver on their strategies and plans. Several companies use its Sell-It Suite tour operator reservation system.
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The recent insolvency of Low Cost Travel Group, one of the large players in the travel industry had a big impact on the travelers, hotels and all related players from both wholesale & retail arms. There were about 27,000 people on a holiday who had booked through the company comprised of a €200 million wholesale arm and €500 million OTA / retail arm.